IT’S difficult to avoid being offered a ‘deal’ these days. Whether doing the weekly shop or checking your emails, we’re almost constantly bombarded with the prospect of ‘bargains’, from price incentives to buy more than one giant packet of crisps or money off beauty therapies or cleaning services.
While the likes of supermarket ‘BOGOFs’ (no longer including alcohol) have been around for many years, a more recent phenomenon are the ‘daily deals’ provided by online voucher companies, Groupon perhaps being the most famous example. I’m no expert, but as I understand it the concept involves the voucher company and the service provider getting together to work out a deal that allows both parties to take a cut while persuading the consumer to snap up an opportunity.
With voucher firms trumpeting the benefits deals bring businesses in sectors like the hospitality trade – through, for example, the extra footfall brought by money off meals or a hike in occupancy brought by discounted accommodation packages – it seems that everyone’s a winner.
In practice, however, the daily deal doesn’t always deliver. In fact, it seems that operators really ought to have their wits about them before getting into bed with a voucher provider.
Groupon, the company some credit with inventing the whole daily deal concept, received a severe talking to by the Office of Fair Trading last month.
An OFT probe found “widespread examples” of Groupon breaching “consumer protection regulations”, with the watchdog concerned “over practices involving reference pricing, advertising, refunds, unfair terms, and the diligence of its interactions with merchants”.
Groupon is said to have co-operated fully with the investigation and has signed up to a range of undertakings to clean up its act.
But even where a voucher provider is not guilty of breaching the rules it still pays to be vigilant.
Social media advisers told SLTN that operators tempted to offer daily deals should take several key factors into account before deciding if it’s worthwhile.
If a bar, restaurant or hotel is to gain something from a deal, experts say they must avoid making it available at times they’re already busy.
An effective deal will allow the operator scope for an upsell – for example, don’t include drinks or desserts in a two-course (starter and main course) offer – and should also be capped and sold for a limited time only.
It is also advised that operators should not be afraid to say ‘no’ if the terms are not commercially viable (the commission charged by some voucher firms starts at 35% and can rise even higher) and to work out what kind of deal will work for them in terms of the cut and upsell opportunity before taking the plunge.
Given the potential for headaches, it’s perhaps no surprise some operators hold no truck with deals – and that’s before we consider the argument that they attract bargain hunters only and don’t build genuine customer loyalty. But there is no doubt that it works for some. Ultimately, operators should work out whether they will get less than they bargained for before striking a deal.
• Thanks to Craig McGill of contently-managed.com and Rene Looper at tuminds.com
